An Industry in Crisis

Fed up with El Gordo spending your hard-earned cash like a drunken sailor?  Fancy earning £600 per day tax free, plus accomodation and car, working 6 weeks on/3 weeks off?

If so, then simply learn an engineering discipline and join the oil and gas industry.  At the moment, companies are crying out for people.  They are desperate.  They are throwing money at people, and still coming up short.  There are simply not enough people.  Trying to find a decent risk-based inspection engineer, HAZOP chairman, or instrumentation engineer is an impossible task, it would seem.  Actually it’s not, but if you are trying to find one on the cheap you might as well recruit the next chap you pass on the street.  One of the side effects of this situation is the older chaps can no longer afford to retire, as they would simply miss out on too much money.  Hence the industry is full of blokes well past 60 making hay while the sun shines, and wishing it was like this when they were in their twenties.

A couple of weeks back The Economist ran a special feature on the search for talent, and in their lead article they said:

[T]wo things are making it much harder for companies to adjust.

The first is the collapse of loyalty. Companies happily chopped out layers of managers during the 1990s; now people are likely to repay them by moving to the highest bidder. The second is the mismatch between what schools are producing and what companies need. In most Western countries schools are churning out too few scientists and engineers—and far too many people who lack the skills to work in a modern economy (that’s why there are talent shortages at the top alongside structural unemployment for the low-skilled).

The feature deals with the hunt for talent in all industries not just in oil and gas, but when taking my own industry into consideration, the points made above only partially apply.

It is true that sometime in the early 1990s the oil and gas operating companies laid off thousands of staff worldwide in an effort to cut costs and concentrate on what they perceived to be core business.  This was way before my time, but there are still enough old hands kicking around to tell you that they went from being dedicated staffers to ruthless contractors who, as the article says, prostitute themselves to the highest bidder.  Who they work for is not important, how much they are being paid is.  This led to the expansion of the oilfield services companies such as KBR and Schlumberger who were only too happy to pick up the expertise and start providing the services which the supermajors no longer considered to be core business.  The problem lay not so much in the existing expertise disappearing from the industry altogether, but it served to very much restrict new blood coming in.  The oil and gas industry ceased to be a source of secure employment, and became increasingly the territory of mercenaries and bandits (who, to be fair, had always been attracted to the wilder fringes of the industry).  This coincided with the time when IT companies and management consultancies were on the rise and trying to recruit the best and brightest from universities, and unlike the oil industry were able to offer their potential employees work in a location which does not involve deserts, snow, or large metal platforms at sea.  It is a situation which the oil companies are now deeply regretting creating.  Desperate for people, they are struggling to recruit the numbers needed to continue their operations.  But if the industry’s own shortsightedness in the past led to this situation, their current actions are doing far greater damage.

Most of the large oil companies recruit heavily from the best universities in the world, offering the successful applicants hefty salaries, impressive graduate training schemes complete with exciting placements and plenty of business class travel.  Which is all well and good, and no doubt this strategy is well conceived.  So on the surface, it appears that recruitment and retention of young people into the oil and gas industry is pretty healthy.  It is not.

The problem comes when companies try to recruit experienced hires.  It is not just a problem which afflicts the operating companies, but also the oilfield service providers, the engineering contractors, and – at the bottom of the chain – the engineering consultancies.  I do not know whether it is an ego thing on the part of the chap needing the individual or plain ignorance on the part of the HR department, but the demands they place on the individual sought are in many cases laughable.  We all laugh at the mythical job description that asks for a 25 year old with 15 years experience, but there is some truth behind the joke.  It appears that companies are only interested in recruiting people who have a minimum of 10 years experience in a particular field of expertise.  It takes most people a few years hopping about between companies and industries before they find the thing they are good at (graduates tending to take the first job offered and look for a better position once they are earning).  So realistically, a person who has at least 10 years experience in a particular field of expertise is going to be in his early 40s at best, and most likely in his mid 40s.  If, as many companies do, you want somebody with 15 years experience you’ll be looking at somebody in their 50s.

Take a look at this site for example, World Wide Worker, a well-known recruitment site for the oil and gas industry.  At the time of writing, the jobs on offer stood as follows:

0 years experience = 6 jobs

1-2 years = 15 jobs

3-5 years = 64 jobs

6-10 years = 139 jobs

11-15 years = 199 jobs

15+ years = 98 jobs

Now what does that tell you?  That 57% of all jobs available in the industry require more than 11 years experience, with a whopping 83% needing more than 6 years, equating to somebody in their early 30s?

Which is fine if, and here’s the rub, they really need somebody with that much experience.  But looking at half of the jobs advertised as such, they don’t need people with anywhere near that level of experience at all.  For example, take this job advertised by “a leading international consultancy company” for the position of Cost Engineer, for which they require a candidate with a minimum of 10 years experience:

Main Purpose Of Job:

To perform project cost budget development, monitoring and forecasting; preparation and validation of cost status reports.

Job Objectives:

1.To review cost data source documents (PO’s, Subcontracts) and similar documents for assignment of correct cost codes.

2 To maintain project records of cost data for all cost analysis and reporting functions from various sources.

3 To assemble data for preparation of project cost reports and cost forecasts.

4 To identify areas of budget concern and potential impact on project financial performance.

5 To assist with implementation and operation of McSIS when applied to a project operation, and monitors work productivity against established norms

6 To apply Company policies and procedures and Country labor law as related to manpower daily and overtime rates for forecast and future planning reports.

ESSENTIAL WORK ACTIVITIES

Handling Info / instructions
Clerical / admin functions
estimating / Calculating
Collecting information
Analyzing / Integrating / Interpreting
Checking
writing / drawing
Deciding

Safety And Quality Responsibilities:

Maintain standards of safety and comply with Company’s Health, Safety and Environment Management System requirements.

Take reasonable care of own health and safety and that of others in the workplace.

Follow and maintain Company standards of Quality in accordance with Company Quality System requirements.

Are they joking?  They need somebody with 10 years experience to do that?  Those activities as listed could be carried out by any smart graduate in his late 20s with 3-5 years experience of working in support of somebody in a similar role.  In fact, I’d wager I could do about 90% of that even without ever having had formal training or mentoring.

And look at this one!  It’s an interntional engineering company who wants a Contracts Technician with a minimum of 15 years experience.  Is there really any “Western qualified Diploma holder” alive who has 15 years experience in oil and gas contracts and is still only at the position of Contracts Technician?!!

Here’s another from Petrofac, of all people.  I’d have thought they’d have known better:

Petrofac is on the look out for a Project Engineer.

Duties:
* Provide support for proposal preparation as required, which may include coordination of the effort.
* Responsible for project engineering execution and effectively communicating contract and project scope details to all engineering team members.
* Ensure that work is performed in accordance with the applicable Petrofac Quality Procedures and Work Procedures and that Project Quality Plan requirements are achieved.
* Work closely with the Project Manager to see that the project budget and schedule requirements are met.
* Maintain project technical records including meeting minutes, changes in scope of work, and reasons for major assumptions, decisions and changes.
* Monitor the project technical progress and inform the Engineering Manager and the Project Manager of any work or proposed work that appears to be outside the project scope or any serious problems in task accomplishment.

And they want somebody with “a minimum of 18 years of related experience”!!!  The above tasks could be adequately performed by a decent engineer with 5-8 years experience on a couple of major oil and gas projects.  But no, these guys want somebody who is coming up to retirement.

This is normal.  I have personally been party to a tender where the client was demanding no less than six risk-based inspection engineers all with 15+ years experience on similar facilities.  For those of you who have no idea what I am talking about, you would be hard pushed to find one such person who is not in the clutches of a major oil company and being bribed to stay, never mind six just sitting around on the dole waiting for somebody to employ him on a project.  And what’s more, the client was also demanding a further six project managers also with – you guessed it – a mimumum of 15 years experience each.

But wait, there’s more!  When I first went to the Middle East I was part of a project which, put simply, involved little more than interviewing technical people in the company, looking about a bit, and writing reports on our findings.  There was definitely some technical expertise required on the project team, but lets just establish right now that the project manager’s role consisted in its entirety of telling half a dozen people where to go, making sure they wrote their opinions in something resembling a report, and communicating effectively with the client.  For this the client demanded somebody with 15 years experience.  We didn’t actually have a project manager of any experience, so we simply shoe-horned in a bloke who had 15 years experience of doing something completely different, and that suited the client fine.  Or at least, it did until it became abundantly clear that the Project Manager, who never wanted the job in the first place, was not actually a project manager and the job was completely down the tubes.

And herein lies the danger.  Companies in the oil and gas industry insist on a person having 15 years experience, and are adamant about this longevity of service, but are not so fussy about what those 15 years have actually entailed.  In fact, they barely ask.  So long as you have grey hair and have done something since you left university, you must be okay.  Hence it is better to have on your CV 15 years of blinding incompetence than 5 years of brilliance.

The situation wouldn’t be so bad if it was only halfwits in national oil companies making these demands, but the large western oil companies aren’t any better.  Shell have a large presence here in Sakhalin Island, and need to staff their operations both now and for the future.  Unfortunately, they are only interested in recruiting people to come to Sakhalin Island if they have, you guessed it, a whole load of experience already.  Now for those of you who haven’t been paying attention to my ramblings about Yuzhno-Sakhalinsk, the place is a complete dump.  Think Port Talbot without the charm and architecture following 30 years of neglect.  Most westerners wouldn’t dream of coming here.  Yet more would take one look at the place and dash headlong for the steps leading onto the plane which just brought them here.  It is a rough, tough, dirty place.  Hardly anybody speaks English, and the place is full of very good looking young women some of who are, erm, rather keen on western men.  In short, it is a place for young single men, not middle aged married men with a young family.

Yet by demanding that all recruits to Yuzhno-Sakhalinsk (or indeed most other oil towns the world over) have years of experience, the oil and gas companies are preventing the one group of people who are most likely to want the job from even getting to the interview stage.  So what you end up with is companies having to pay through the nose to attract older people, which in turn leads to middle-aged men reluctantly taking jobs in places like Yuzhno-Sakhalinsk and watching helplessly as their marriage falls apart.  Anyone who has worked in an oil town will tell you that the most destructive element in the industry is the lonely married man amongst a sea of young, available women.  Of course, this doesn’t always happen:  many companies genuinely need the experienced people, and many are able to recruit such expertise without causing a breakdown of their homelife.

But it is a challenge for all companies to manage, and it is not doing them any favours by chucking the CVs of anyone who is deemed too young in the bin.  After all, what does this say to the generation which is to replace the one shortly to retire?  All I hear is oil and gas companies complaining that there is no new talent coming through.  Well here’s a tip:  how about you employ some of them who apply, instead of telling them to come back in five or ten years?  Because smart engineering graduates aren’t going to come back, they’ll simply knock on the door of the nearest management consultancy who will be delighted to take them on.  You might detect some bitterness in this post, and indeed it is here aplenty.

I applied to dozens of jobs in Russia, many of them with Shell on Sakhalin Island.  I had 5 years experience, albeit in a variety of roles such that I am specialised in nothing in particular, but all of it in oil and gas and much of it as an expatriate.  I had good knowledge of Russia, spoke a fair bit of the language, and genuinely wanted to live there for the forseeable future.  I was under 30, with no baggage to speak of, and could move to live on location with a standard leave package within a month of accepting an offer.  I thought I’d be a pretty damned good candidate, all things considered.  Guess how many interviews?  None.  Not one.  Guess how many follow-ups?  None.  In the case of Shell, you submit your application online and a computer then sends you an automated email telling you that your application has been unsuccessful.  I tried a variety of positions and a variety of responses on the application form, yet every time I was automatically rejected.  This might be down to the fact I am hopeless and my CV reflected that, but I am more inclined to think it was my lack of age and nothing more.  Unless I am missing something, Shell appear not to want to recruit people with 5 years relevant experience who have a burning desire to work in Russia and can arrive already conversant with the language to their operations in Sakhalin Island.  Fortunately, one company did eventually grant me an interview and subsequently offered me a job, which I of course accepted.

So when I read that oil and gas companies are struggling to recruit new blood and their existing workforce is getting dangerously near retirement, I am reminded of the complaints of a chap I knew at university who was forever complaining he couldn’t find a girlfriend: it wasn’t that he didn’t have the opportunity, he was just too damned fussy and never took what was on offer.  He was always demanding perfection.  It’s hard to have sympathy with people like that, and it is equally hard to listen to companies whining that they can’t recruit the right people when they make a spectacular show of driving those same people away when they come bright-eyed and bushy-tailed looking for work.  If the oil and gas industry doesn’t get a grip of this soon, we can expect shoddy workmanship, gangs of useless opportunists, and failed marriages to be accompanying it for the next generation or two.

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14 Responses to An Industry in Crisis

  1. dearieme says:

    If you really put your mind to it, and pour in the hours, you can learn a hell of a lot in your first year at work. A few more years doing different things, a spell of being in charge of a few people – quite soon you should be very highly employable. Then HR people, with no relevant experience and modest IQ, will write a job advert that excludes you. Brilliant.

  2. Keefieboy says:

    600 squids a day, etc? Where do I sign up? Sorry don’t know diddly abt oylangas but am fast learner.

  3. George Hargraves says:

    Some of us can remember when HR was merely Personnel and restricted to losing things in filing cabinets.

    A lot of what you describe, Tim, I’d say is the fault of the cult of Business Studies which enables individuals with the correct paper qualifications to rise to quite senior positions in organisations without ever having actually run anything more practical than a theoretical model.

  4. Tim Worstall says:

    ‘Hardly anybody speaks English, and the place is full of very good looking young women some of who are, erm, rather keen on western men.’

    Err, does anyone need a Russian speaking (sorta) blogger/writer/journo/bribe fixer out there?

  5. W. Shedd says:

    My own engineering qualifications are in geotechnical and environmental (haz waste) engineering. I’ve worked in construction for about 20 years now, with over 10 years of geotechnical engineering and project manager experience. I’ve worked as a Health and Safety Officer on construction sites with contamination and various geotechnical engineering projects, from deep pile foundations for multi-story buildings in Boston to more conventional foundations. None of it directly applied to the oil industry, however. I did the same applications that you are talking about with BP and Royal Dutch Shell, same automated replies saying “no thanks” – even for geotechnical positions. Looked around some other headhunter places as well. None of it came to fruition.

    I feel better about it after reading what you wrote here, though – you have much more direct experience in the oil industry and got those Shell “no thanks” replies also. It worked out pretty well for me anyway, I started a new job last week with about a 15% raise in pay. However, it still isn’t 600 a day, which could have created a nice nest egg.

  6. Larry Barrow says:

    Fine commentary Tim. You could use it for a Doctorial Thesis, with a little tweeking. I could see reflections of our old crew in it. Lots of truth in what you say. I once told you, “In this business you need to know the difference between a Missionary and a Mercenary.”

  7. MikeinAppalachia says:

    Interesting. Let’s see, 600 pounds a day is about twice what US engineers used to get from World Bank and ADB for 1-3 month consulting jobs. Of course, that was less than the frogs received. As for all these opportunities, in my small USA village alone there are at least 3 Chem E’s and a couple of EE’s (Power) looking for work (ANY work!), but most are 55-59, so not much of a chance here. Need to find out where to apply and a Ressian phrase-book!

  8. Josh says:

    Already done so, thank you very much. But 600 per day? From the sounds of it, you’re describing working offshore. I know I’ll be getting just under 600 per week for each day offshore, with free food and of course board (though I’m still paying rent for my flat onshore). I also get a free week off after I come back from a two week period of work. The 600 is on top of my regular salary, though I don’t know if this extra cash is tax free or not.

    If there is a company offering 600 per day tax free plus free car, I’d like to hear it.

  9. Rafat Sadiq says:

    With the shortage of skilled labor, have oil companies followed the US H1B route and recruited from developing countries? I would think there were some qualified engineers in places such as India or Malaysia with the necessary language as well as technical skills. On the other hand, posting a non-white person in Russia may be cruel and unusual punishment.

  10. PeppyGrey says:

    Working for a service provider at the time, Ive been rejected by a Client for not having the required 15 years experience, even though I had 10 years and the recommendation of my management seemingly wasnt enough.

    Companies in O&E simply do not recognized people on the outside as individuals and potential talent. Of course on the inside is where the problems arise with the dreaded pay scales and grade bandwidths. I recently tried to hire a very talented individual but because within the company polices the position required a certain qualification and experience…No joy.

    Its not all bad though Im now on the inside so let the good times roll

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  13. David Evans says:

    Good Stuff. I have the same take through different eyes. I’d like to talk to you some day. David

  14. David Evans says:

    Good Stuff. Same only through different eyes. David

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